Russia’s Foreign Minister Sergey Lavrov declared on February 14, during a meeting with his Ukrainian counterpart Kostiantyn Hryshchenko in Nizhny Novgorod: “We expect to make gas arrangements before long, on a mutually advantageous basis.” Before long sounds good, considering that the Ukraine-Russia gas saga has been underway for almost a year, with Kyiv trying to alter the contract, being forced to pay one of Europe’s highest gas prices, with Moscow insisting that an agreement, once made, has to be honored – the more so that the deal was a very good one for Russia. Concessions can be considered, of course, like following Belarusian example and surrendering Ukraine’s gas transportation system (GTS) to Moscow. The current Ukrainian administration will certainly reject this option, after the Kharkiv accords. Under the circumstances, official Kyiv is looking for help in Europe – as recommended by experts at the very beginning.
Pavlo ZHOVNIRENKO, CEO, Strategic Study Center:
“Imagine a situation. There is this grocery store and there is no freshly baked bread supply as per contract, and then road conditions are blamed, not the bakery or the van with the fresh bread that never left the bakery. Sounds weird? That’s exactly how the situation with Russia’s gas supplies to the European Union looks like, with the EU being the grocery store, Russia being the supplier, and Ukraine providing the roads.
“Remember the gas war between Ukraine and Russia back in 2010, when Russia cut off gas supply and made Ukraine accept a tangibly higher gas price? When Europe had to suffer several days of no gas and urged Ukraine and Russia to resume gas supply? In the end, the Ukrainian political leadership had to put up with Russia’s ultimatum and Ukraine went down into history as the guilty party, thanks to Russia’s propaganda machine that was by far stronger than that of Ukraine.
Ukraine was accused of cutting short Russia’s gas supplies to Europe. Guenther Oettinger, European Commissioner for Energy, confirms that this unstable situation doesn’t satisfy the European Union and that Ukraine remains the most important country that provides for Russia’s gas supply to the European Union.
“Strategically speaking, this situation can’t satisfy Russia and its gas supply plans, but it is the biggest pain in the neck of official Kyiv. This winter is no exception from the rule. Even with steady gas supply from Russia, gas price talks are underway with the Kremlin refusing to alter its stand, demanding Ukraine’s customs union membership or surrender of its gas transportation system, or both.
“Russia’s stance is explained by a number of systemic reasons, including (a) Ukraine’s mind-boggling energy consumption; (b) Ukraine’s refusal to take into account the potential of cooperation with the US and EU in terms of gas sectoral reforms and the upgrading of the gas transportation system; (c) the absence of gas output and supply alternatives; (d) Ukraine’s abnormal stance as a beggar rather than equal party [to the gas talks].
“Suppose we briefly analyze each of these factors. Mykhailo Honchar, director of energy programs at Nomos Center, says that Ukraine, with its GDP roughly equaling that of Hungary, has to pay almost four times per one million dollars’ worth of energy GDP; that if Ukraine had gas supplies on Poland’s level back in 2010, it would need 4.3 billion cubic meters of gas, not some 60 billion cubic meters. In other words, Ukraine could have met its gas supply requirements and export an extra 16 billion cubic meters. Naturally, all this is impossible without cardinally changing the economic strategy, without developing and stimulating energy-saving projects and technologies – with all those ‘upstairs’ being content to make appropriate statements, doing nothing save for the green tariff.
“Ukraine has been a member of the Energy Charter Treaty for the past 13 years. Among its objectives are efforts aimed at securing energy supplies, effective output, conversion, transportation, and distribution. Ukraine has of late made several important agreements with the West, including the United States-Ukraine Charter on Strategic Partnership (December 19, 2008). It reads that the contracting parties ‘intend to work closely together on rehabilitating and modernizing the capacity of Ukraine’s gas transit infrastructure and diversify and secure Ukraine’s sources of nuclear fuel making Ukraine less dependent on foreign sources of nuclear fuel and nuclear fuel storage… enhance a trilateral dialogue with the European Union on enhanced energy security.’ On March 27, 2009, Ukraine and the EU signed a declaration whereby the EU loaned Naftohaz Ukrainy 2.5 billion dollars for the upgrading of its gas transportation system.
“All these projects remain on paper, considering that the Ukrainian administration does not seem to be prepared to implement them. Ditto Black Sea shelf prospecting and development, or the liquefied gas terminal. Petro Poroshenko recently declared in a talk show, on a major Ukrainian channel: ‘Alternative energy sources aren’t the only reason behind the keeping of such projects shelved.’
“The ex-foreign minister, chairman of the board, National Bank of Ukraine, said: ‘We didn’t start building that liquefied gas terminal because we didn’t want to irritate Russia… Ukraine didn’t start modernizing its gas transportation system, just as it didn’t enlist any EU countries, waiting for Russia’s consent.’
“Politicians and experts keep discussing strategic approaches to the issue of gas supplies. These approaches mostly boil down to time- and budget-consuming options, as well as ones affecting Ukrainian national interests. There is a different option which I personally regard as a more logical and effective one that can change the situation cardinally in Ukraine’s favor, several months from now, allowing this country to rid its status as an unwelcome party to the gas relationships between Russia and Europe. Russia has been supplying gas to Europe during and after Soviet times, including Ukraine serving as a transit route, after becoming an independent country. Why transit route, considering that Ukraine has been consuming more gas than all post-communist countries in Europe put together; that it has been a de jure part of the European Energy Community for a year after the EEC Ministerial Council’s resolution (December 18, 2009) adopted its membership, whereupon this country has been able to help share Southeastern European domestic energy market experience and attract foreign inland investments? Ukraine became its full-fledged member on February 1, 2011. It seemed clearly apparent at the time – as confirmed by Russia’s number-one gas supply executive, Valery Yazov – that Ukraine’s EEC membership and the adjustment of its legislation to that of the European Union would make Ukraine’s Naftohaz and Russia’s Gazprom’s merger impossible.
“The fact remains that Ukraine has been marking time for a year, sending delegations to Moscow and receiving them empty-handed. Ukraine ought to have simply implemented its official EEC membership, along with the economic, financial, technological, and geographic parameters. Ukraine’s integration into the European gas market would spell EU protection from Gazprom’s overwhelming embrace and subsequent authorization of Ukraine’s participation in the talks with Gazprom on EU behalf. The EEC is meant to be a party to the gas talks, placing Russia’s gas supplies on a European, EEC-Ukraine-Russia’s level rather than the inner EEC one, on Ukraine’s western frontier.
“What risks and problems would emerge from this scenario? I can’t expect anything serious on the part of the United States and Europe, even considering the worsening of relationships in the aftermath of the trials over Yulia Tymoshenko and Yurii Lutsenko. The Kremlin seems to be the biggest obstacle, although there are other domestic problems, such as the greed of the bureaucrats in charge of the pipeline and official Kyiv’s self-denigrating stance in its talks with Moscow.
“I won’t say anything new on the subject except that an end must be put to the stealing of gas; that the central budget must be isolated from the bank accounts of those who own all such gas-consuming businesses.”
How can this problem be solved? Probably by getting rid of the victim complex. Below is an excerpt from a recent interview with Russia’s former dissident, current emigre Vladimir Bukovsky (The Power of the New KGB, posted by Frontpagemag.com on January 2, 2012). It has nothing to do with Gazprom or Ukraine, but it probably explains the mentality of the Russian party to the gas talks:
“The first thing the new protesters should remember is that it is futile to make any agreements with the KGB. All the Western politicians (with the exception of Ronald Reagan) make here a basic error. Western politicians simply do not grasp the fact that among the species of Homo sapiens there exists this very special type. You cannot make agreements with the representatives of this type because it is not in their plans to make agreements. Their task is to make you their agent. You are either an agent (potential or actual) or an enemy; nothing else exists. You may think that you are conducting yourself in a civilized manner when you find some compromises, but for them, any compromise is a sign of weakness, and it means that you should be pressed and pushed further. So one must remember – the quicker one sees through them, the less one is their victim.
“I can tell you a story. Well, it has some non-standard language, but I will try to smooth the rough edges. In our camp I met an old teacher from Zakarpattia oblast of southwestern Ukraine. He was an erudite, knew five languages, and was an extraordinary man. But all of a sudden our supervisor begins to punish him and sends him to solitary confinement for 15 days, and repeats this again and again. In the camps among the prisoners there was this multi-ethnic committee – or so it was called. People of different nationalities – Armenians, Jews, Ukrainians, Russians, Lithuanians – gathered to discuss the situation in the zone. And here emerges the new problem: how to help our intelligent teacher. I (instead of keeping my mouth shut) say, ‘The supervisor is trying to make him a stool pigeon, and our teacher is not able to send them all to hell. One should use the foulest arsenal of four-letter words as soon as possible. They do not understand any other language.’ Well, any initiative is punishable. The committee decided that I should explain to the teacher the situation as soon as he finished his new term in solitary confinement. When the teacher came out from his solitary cell, I explained the situation to him and tried to teach him how to swear. To use Russian ‘mat’ (swearing language) in full measure – according to the system of Stanislavsky. But the teacher’s lips refused to move. He simply could not say it. He knew five languages, but he could not swear. Three hours I was instructing him. Finally he learned; he grasped the situation in full depth. Next time the supervisor sent him to the solitary confinement for 15 days, the teacher swore hard and dirty, and when he finished his 15 days, they no longer touched him. This is a story – a Gulag parable, in fact. It shows that with the KGB one cannot behave in any other manner. They do not understand subtlety; their heads work differently. They have been trained only one way. And if you cannot send them off with the foulest four-letter words, you will bind yourself to a great woe.”
Some will argue that this is a harsh approach. Granted. Head shrinkers say a patient should be treated by using the kind of language he understands. Second, Bukovsky’s quote isn’t necessary in a diplomatic exchange, considering that the most threatening statement can be made in diplomatic terms, if and when the one who makes it means it and is prepared to act on a bona fide basis.
Is the current Ukrainian political leadership prepared to act that way? It must be, considering that there are no exceptions from history lessons, with the Kremlin’s undisguised gas blackmail disgusting all, including those who, while not being in power, previously found it easy to come to terms with it.
